Sen. John Thune introduced legislation last week that would force the feds to end ownership of private firms by July 1, 2010, and would bar any future use of TARP money to acquire new ownership shares. | John Shinkle/POLITICO

Republicans want TARP money back

If President Barack Obama thought Republicans would give him a break — or maybe even a little credit — for the Treasury Department’s recent announcement that 10 banks were allowed to repay their federal bailout funds, he can think again.

Republicans in both chambers are calling for the White House to develop an “exit strategy” for the Troubled Asset Relief Program, the $700 billion rescue plan conceived by the previous administration.

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The Treasury announcement that 10 banks can repay their TARP funds has not quelled GOP complaints that a bailout-happy Obama is irresponsibly running up the national debt; rather, they pounced on administration statements that the repaid money could be recycled to other struggling banks.

And the administration’s scheduled unveiling Wednesday of the details of its proposal to revamp the nation’s financial rules sets the stage for another round of complaints about how the White House has handled the rescue effort.

The continued disagreements over the financial rescue could trip up Obama as he attempts to turn his economic agenda toward the future — most notably by convincing Congress to commit to the massive spending his health care overhaul will require.

“Make no mistake: The cost of our health care is a threat to our economy,” Obama said Monday in a major speech to the American Medical Association, directly linking the issue to the country’s economic health.

And it’s not just Republicans who continue to grumble about TARP and the federal government’s involvement in private companies that the bailout has spurred.

Senate Finance Committee Chairman Max Baucus is asking for a full-scale audit of what the federal government is doing with companies that it’s taken a significant stake in as a result of the financial bailouts, complaining that such a report has not been delivered despite his request “nine long months ago.”

“We need to ensure proper systems are in place to allow government to get back to the business of governing as quickly as possible and struggling companies to emerge with health management and operations,” Baucus said in a statement. “That is the primary goal of the TARP program. It was a precondition of my support, and it’s what the millions of Americans still on the hook for these dollars expect.”

Treasury last week announced that 10 of the biggest banks that received TARP money, many under the prodding of then-Treasury Secretary Henry Paulson, would be allowed to repay the funds — a total of about $70 billion if it’s all paid back.

The development was cheered by those firms, and the administration touted it as a sign of financial recovery.

But it failed to satisfy GOP critics of the program, since the administration would not promise that the returned money wouldn’t be lent out again in future rescue operations.

On Friday, more than two dozen House Republicans, including the GOP leadership, sent Obama a letter — which was followed by a press release to the media — urging him to use the repaid TARP funds to “pay down the national debt and help restore lost confidence among American taxpayers.”

“This money is not a discretionary slush fund for the Treasury and the Obama administration,” said Sen. John Thune (R-S.D.). “Congress controls the power of the purse, and this money should be directed toward debt reduction. Treasury has greatly expanded the original intent of the TARP funds, and spending those funds that have been returned as they see fit is unacceptable and puts taxpayer dollars at greater risk.”